Precogs – Improving and Fortifying Supply Chain

We met up with Jean Louis Andorin, COO of Precogs recently. Jean Louis gave us a brief insight into Precogs. Precogs is a business analytics company offering visibility on the risk of adverse events in the electronic manufacturing supply chain.

Who are you?

Precogs is a French start-up company specializing in data analytics for electronics, and especially for electronic components. We have two kinds of products: the first is a cost saving tool that analyzes component pricing, line by line, part number by part number, and provides the best cost saving item. The second product we have is data analytics regarding fluctuations in supply chain delivery times, which tends to be extremely volatile.

How did you come up with this idea?

This idea came from our CEO, Adrien Sandrini. For several years, he worked for PSA Peugeot Citroën as a supply chain manager. When he joined the electronics industry at Sagemcom – a famous French company – he was absolutely shocked at the fluctuation of delivery times and the volatility of component prices. For example, he would receive calls from his plant in Tunisia on Wednesday morning saying “we will have to stop the production line early morning Saturday”. “Yeah, okay. Saturday in two or three weeks?” Adrien would say. “No, no, no, this Saturday!” the plant would say. Adrien was confounded. How is this possible? It was precisely because of the volatility of the market that these things occurred.

So Adrien decided to work with his friends to develop a product to combat this problem, which was made available after roughly 2 and half years of R&D. The company was launched in 2011, and our first product was released in August of 2013. Today, we have some of the largest electronic manufacturing customers in France, including Sagemcom and LACROIX Electronics.

What is your business model?

Our business model is quite a win-win. We sign an NDA to protect both parties always. We then provide our customers with a secured link, with a double password, to ensure that you can upload excel file securely. After this, we work on the analysis, which takes approximately 5 days. We then call the customer and present our analysis by giving them an example of 10-20 lines where there are discrepancies. This part is free of charge. Once we have this information, we tell our customers to check our findings by asking their buyers to call their distributers and suppliers. They can then check whether our suggested target price is actually what they are receiving. Of course, they will never obtain the right rebate immediately, but they are great targets to help them obtain the right pricing quickly. If the free trial is okay for the customer, then they have the opportunity to get our full services – where they can buy it at a flat rate, based on a percentage of the theoretical savings they may obtain.

What makes you unique? Who is your competition?

Unfortunately for us, there is no competition. I hope we have competition one day. We need to have competition to improve our system. Some people today are trying to do this but it’s more based on product family. The really unique thing about Precogs is that we are doing this part number by part number. That means we are really precise on target prices and deliver times. We can manage a delivery time for one component, not only your product family, and this is what is really unique about this system.

Could you please highlight any case studies that relate to your product?

I will give you a very simple example. A typical subcontractor, has thousands of lines to negotiate every year and quarter. It would be impossible for them to negotiate, line by line, for each component. Generally speaking, a key industry player will negotiate 20-30%, which amounts to the largest financial portion of your bill of material (memories, fpga’s, and so on). And thus, it is generally difficult to reduce the pricing. The rest of the bill of material, you will perhaps see a 7% decrease per year. Is it the correct reduction, or a great bargain? I’m not sure. Perhaps the market decreased by 20 or 30%. So there is something that needs to be done.

Could you give us a more detailed insight into your process?

What we are doing is we get the bill of material from our customers, sign an NDA and give our customer a secure link. What happens then is the customer uploads their bill of material as an excel file – which includes the manufacture (unclear) part number, the quantity, unique price and the currency (which could be US Dollar, Euro, Yen, it doesn’t matter). What we do then, is get our data analysts to check see what the best public price on the market would be for a lowered quantity.

For example, you have 1 item and 10k pieces. We will analyse for the same part number but for a different quantities – 5k, 6k, 7k etc. We will then offer them the best public price, which is only a reference, meaning a parameter for the final results. After this, we will calculate the normal rebate you should have for this component with the size of your company, the manufacturer policy, the product range and so on.

We will obtain a curve from this information and see where you should be. Out of this curve, there will be some outliers. For example, you are buying capacitors that are one typical size. With one manufacturer, say TDK, you are paying at 20% from the best public price, and some of your best items you are only at 60%. From this, there is huge potential to reduce your costs. And, this is what we return to our customers.

Are you looking for any funding or talented individuals to hire at this moment?

Yes. We are looking for funding but I believe this will be solved within the next few months. We need this to really expand and go global because the market today is really worldwide, especially In the US, India, China, and Asia as a whole.

Do you have any plans for Germany?

There is of course a lot of potential here in Germany. We will be present at the Heidelberg Innovation Forum in April. Afterward we will be presenting at the Best of Both in Berlin, and in Munich at Electronica in November.